A First Glance at Your Next Contract

10 Vital elements to scrutinize in any hotel agreement

• Find out who is the ultimate owner of the hotel, who would be responsible if a lawsuit is necessary. It's probably not the brand owner.

• Are the rates, dates and space all spelled out properly?

• Attach a copy of the floor plan, indicating which rooms you will be using and when.

• Is anything in the contract unclear? Ask for clarification and rewrite if necessary.  

The old adage of not judging a book by its cover applies to the next contract that crosses your desk, because first impressions are just that -- first impressions.

When you get a contract, keep in mind what your business needs are vs. the clauses that will help you manage the risk that you will incur by entering into the agreement. Following are 10 things to look for right away.

1. Who are the parties to the contract?
Does the first sentence properly identify who the property owners are? If not, who are you going to go after should something go wrong? It might say the name of a hotel brand, but they are probably not the parties that ultimately will be legally responsible. Find out who that is and put them in that sentence.

2. Are the dates, the rate and the block consistent with the bargain?
Have you made provision for possible adjustments to these details without liability? Review dates should be built in to minimize attrition or cancellation charges.

3. Are the spaces you are renting delineated by room names, or do you have a floor plan that clearly shows which rooms are going to be yours? The rooms or the venue should be written out clearly. A bit of advice: Room names can change, but floor plans generally don't. Attach a simple chart as an exhibit to the agreement. Also, make sure no one can reassign your space without your prior written consent and approval.

4. Is a commission to be paid and, if so, to whom and under what circumstances? Third parties often are victimized because contracts don't have clear language stating who is entitled to compensation for booking an event at the hotel.

5. Is an indemnification provided, and is it mutual? If not, either delete the clause or rewrite it so it is mutual.

6. Are there provisions allowing you to cancel or reduce activities without liability? Reasons could include remodeling, change of hotel flag, change in management, deterioration of property and the like. These are different from force majeure or acts of God.

7. Does the contract provide a "prevailing party" clause? If it does, delete it. In the event of a claim being made, the party that "prevails" also is entitled to recover attorneys fees and costs. The clause can be an invitation for a lawsuit or claim to be filed, because the other side knows its attorneys fees will be part of the spoils recovered.

8. Are provisions included spelling out how the parties must give notice regarding cancellations or other changes? Pay very close attention to whether you're supposed to send this notice by mail, email or other means. The courts can be very sticky about this point.

9. Is there an arbitration clause? Some arbitration clauses are ambiguous, so read it thoroughly and determine if anything is missing, such as where the arbitration will be held and who the administrator will be.

10. Are there any clauses you don't understand clearly? If there are, find out what is intended, and then rewrite the clause, if you agree, in language both sides understand.

This is not an all-inclusive list, but it's a good start. Be sure to scrutinize everything, and do not hesitate to ask questions.